White House fumbles econ message

WHITE HOUSE FUMBLES ECON MESSAGE — There should be no easier play for the Trump White House than touting a very strong economy with low joblessness and fast growth. And yet President Trump’s uncontrollable penchant to aggrandize what are already good facts with easily disprovable falsehoods is killing their messaging efforts.

Monday’s problems started with this tweet from Trump: “The GDP Rate (4.2%) is higher than the Unemployment Rate (3.9%) for the first time in over 100 years!” That’s simply not true as anyone can check just by going to the Fred database here. This phenomena has occurred dozens of times over the last century most recently in 2006. CEA Chair Kevin Hassett at a White House briefing tried to say that Trump simply added a zero and meant 10 years, not 100. But it wasn’t ten years ago either.

Story Continued Below

And it’s all part of pattern with Trump in which the economy must be entirely his doing and nothing to do with President Barack Obama and the best in history (which it isn’t, by a huge stretch.)

Trump also tweeted: “If the Democrats had won the Election in 2016, GDP, which was about 1% and going down, would have been minus 4% instead of up 4.2%. I opened up our beautiful economic engine with Regulation and Tax Cuts. Our system was choking and would have been made worse. Still plenty to do!”

This is also demonstrably false. GDP was closer to 2 percent in the fourth quarter of 2016. And there is no reason at all to think if Hillary Clinton had won that we would have gone into the kind of sharp recession that minus 4 percent GDP would indicate. Maybe we would not have had 3 percent plus from tax cuts and deregulation. But the economy has been remarkably steady for nearly a decade and that would have continued no matter who won the White House.

WHY THIS MATTERS — Voters pretty much love the current economy, according to the latest Quinnipiac poll, with 70 percent rating it “excellent” or “good.” But it’s not translating into any higher support for Trump. The same poll shows him with just a 38 percent approval rating. So White House efforts to associate Trump and the GOP with the strong economy is crucial to limit Democratic gains in the midterms.

But if Trump and his advisers are constantly having to defend the president’s inaccurate and outlandish statements, the message gets lost and it only reinforces the widespread public perception that Trump can’t be trusted. And it’s all so totally unnecessary. Trump could simply stick to the facts on the economy – both the growth rate and the jobs numbers and capital investment – and have a very good story to sell.

Some of his advisers like Hassett and NEC Director Larry Kudlow are out there selling it pretty well but it really doesn’t matter if the guy in the big chair can’t get it right. Trump doesn’t need to make stuff up or turn it into a contest with Obama. But he’s dealt in outsized superlatives all his life and that probably won’t change.

Here’s how Quinnipiac pollster Tim Malloy described the latest findings: “The economy booms, but President Donald Trump's numbers are a bust. An anemic 38 percent approval rating is compounded by lows on honesty, strength and intelligence.”

HASSETT’S CHARTS — You can see all the ones he talked about at the briefing in this CEA twitter thread. And he made a strong case on investment and confidence rising sharply with Trump’s election, though some of the other charts don’t show as dramatic a shift in trend.

POLITICO’s Tim Noah has more on Hassett here: “The latest assertion … contradicted the conclusions of most mainstream economists and appeared to signal that the Trump White House feels a strong economy isn't sufficient reason to vote Republican in the midterms unless it creates a contrast with Obama. …

“A former Obama administration official countered that capital investment is rising globally, making it doubtful that it can be attributed to U.S government policy.The former official also puzzled over the charts' presentation of data as a series of six-quarter averages rather than by the usual measure of a month, a quarter, or a year. ‘They form-shopped what they were doing,’ this person said.”

CANADA, WE HAVE A PROBLEM — MM hears from a senior White House official that the administration is not super fond of Canadian foreign minister Chrystia Freeland. Many feel she’s been inflexible on critical dairy issues and taken some unfair shots at White House officials in the press. This person said a bilateral deal with Mexico that leaves out Canada remained a serious possibility though not the desired outcome.

FREELAND BACK — POLITICO’s Doug Palmer and Sabrina Rodriguez: “Freeland will return to Washington on Tuesday for more high-level talks on a North American trade pact, as the White House still hopes to close a three-way deal. Officials are aiming to reach a breakthrough by the end of the month to add Canada to the new NAFTA framework that the U.S. and Mexico hammered out.

“Freeland's spokesman today confirmed high-level talks set for Tuesday, but it remains unclear if she will stay in Washington all week. A spokeswoman for the Office of the U.S. Trade Representative said the meeting is tentatively scheduled to start at 11 a.m.” Read more.

EXPECT ANOTHER NFIB SMALL BIZ RECORD TODAY — Pantheon’s Ian Shepherdson: “If you had only the NFIB survey of small businesses as your guide to the state of the business sector, you'd be blissfully unaware that the economic commentariat right now is obsessed with the potential hit from the trade tariffs, actual and threatened.

“The headline sentiment index rose to a record high in July—the survey has been running since October 1974—and the odds favor a further increase in the August report, due today. … It's possible that business owners think the broader tariffs threatened by the administration won't materialize, and that judgment might be wrong. But it's also possible that their businesses are doing so well that they think the impact of tariffs would not seriously damage their performance.”

VULNERABLE REPUBLICANS BALK AT MORE TAX CUTS — POLITICO’s Nancy Cook and Bernie Becker: “The White House and top congressional Republicans want to push for a House vote on a second round of tax cuts ahead of the midterms in hopes of bolstering their economic pitch to voters — but they're running into opposition within their own party.

“GOP leaders conceived of the second tax bill as a messaging win that would put Democrats on their heels ahead of the midterms, forcing them to vote against tax relief for the middle class. But the concerns over the bill are largely flowing from the Republican side, mainly from members fighting to keep hold of seats in suburban districts where … Trump is most unpopular — and that are key to the GOP's hopes of keeping their majority.” Read more.

Trump can't get economic facts straight. | AP Photo

POLITICS IN 60 SECONDS — Catch my latest video for GZeroMedia here breaking down the biggest stories in politics for you in under a minute.

DRIVING THE DAY — President Trump will observe the Sept. 11 anniversary with a ceremony for the heroic victims of the United Flight 93 crash in Pennsylvania … NFIB Survey at 6:00 a.m. expected to rise to 108.2 from 107.9.

TEN YEARS LATER — NYT’s Andrew Ross Sorkin echoes some of the same themes we hit in MM on Monday on the long-tail impact of the crisis: “The crisis was a moment that cleaved our country. It broke a social contract between the plutocrats and everyone else. But it also broke a sense of trust, not just in financial institutions and the government that oversaw them, but in the very idea of experts and expertise. The past 10 years have seen an open revolt against the intelligentsia.

“Mistrust led to new political movements: the Tea Party for those who didn’t trust the government and Occupy Wall Street for those who didn’t trust big business. These moved Democrats and Republicans away from each other in fundamental ways, and populist attitudes on both ends of the spectrum found champions in the 2016 presidential race in Senator Bernie Sanders and Donald J. Trump.” Read more.

Also from Sorkin: “Too Big to Fail is being reissued this week with a new afterword that does a full accounting of everything that's happened in the past 10 years and draws connections between today's culture, politics and economy with the continued reverberations of the crisis.”

On Wednesday, Andrew has a 1 hour doc airing on CNBC at 10pm EDT with all the insiders recounting the crisis: Paulson, Geithner, Dimon, Buffett, Mack, Thain, Pandit, etc...

FLORENCE STRENGTHENS -- Governors in the Carolinas and Virginia ordered widespread coastal evacuations as Hurricane Florence strengthened and threatened fierce winds and potentially days of rain and flooding.

INSURANCE SHARES SINK -- FT’s Peter Wells: “Insurance shares took a hit on Monday as officials warned on the ‘potentially catastrophic’ impact of Hurricane Florence, a major storm that could hit the east coast of the US as early as Thursday. But the likelihood of the rebuilding effort that could follow such a storm propped up home improvement companies such as Home Depot and Lowe’s.

“The National Hurricane Center upgraded Florence to a category 4 storm on Monday and described it as an ‘large and extremely dangerous hurricane’. Data showed its maximum sustained wind speed at 140 miles per hour (220km per hour) and the NHC said further strengthening was anticipated. A ‘life-threatening storm surge’ is likely along portions of the coastlines of South Carolina, North Carolina and Virginia, the NHC said, with a storm surge watch likely to be issued for some of these areas by Tuesday.” Read more.

LIGHTHIZER EYES NEW EU TRADE DEAL — POLITICO’s Doug Palmer: “U.S. Trade Representative Robert Lighthizer seemed to suggest on Monday that the Trump administration hopes to negotiate a trade agreement with the European Union that would be need to submitted to Congress for approval, after the president and European Commission President Jean-Claude Juncker reached a temporary truce in July on trade tensions.

“In the short term, the U.S. hopes to reach a quick deal with the European Union to resolve certain technical barriers to trade, Lighthizer said after his meeting with EU Trade Commissioner Cecilia Malmström. ‘We look forward to each party pursuing their domestic processes for negotiating mandates,’ Lighthizer said in a statement. ‘USTR will begin consultations with Congress pursuant to trade promotion authority to facilitate negotiations on longer-term outcomes.’” Read more.

ROSS IN BRUSSELS — POLITICO’s Megan Cassella and Hans von der Burchard: “Commerce Secretary Wilbur Ross is traveling to Brussels this week for a series of meetings with government officials and private-sector representatives to discuss trade and competition. Ross will hold separate meetings with European Commission Vice President Jyrki Katainen and European Commissioner for Competition Margrethe Vestager, an EU spokesman told POLITICO. It was not immediately clear whether he will meet with … Malmström.” Read more.

U.S. BANK LAUNCHES SMALL DOLLAR LOANS — POLITICO’s Victoria Guida: “U.S. Bank … announced it is launching a small-dollar loan product for its checking account customers, who will be able to take out installment loans of $100 to $1,000. The product, ‘Simple Loan,’ comes in the wake of a May bulletin from the Office of the Comptroller of the Currency, which in a major shift encouraged banks to offer installment loans.

“U.S. Bank says it's the first national bank to offer small-dollar loans structured this way.Borrowers will be required to repay in three fixed payments over three months. Each customer can obtain only one loan at a time and will face a 30-day waiting period after repayment before he or she can apply for another loan” Read more.

TRADE WAR BOOSTS YUAN USE — Karen Yeung in the South China Morning Post: “The trade war initiated by the United States is actually helping China achieve one of its coveted long-term financial goals — the greater use of its currency, the yuan, in international commerce and financial transactions.

“As of the end of the second quarter, overseas institutional and individual holdings of yuan-denominated financial assets totaled 4.9 trillion yuan ($717 billion), according to ICBC International, the Hong Kong investment banking arm of Industrial and Commercial Bank of China, one the country's big four banks. Within that total, the share of yuan-denominated stocks and bonds as a percentage of total assets held by global investors increased to about 2.5 percent and 3.0 percent, respectively.” Read more.

ALSO FOR YOUR RADAR

TRACKING 2155 — Per the ICBA: “As the Senate Banking Committee prepares to hear from regulators on Thursday about the implementation of the S. 2155, we wanted to make sure you saw our new S. 2155 implementation matrix.”

TRANSITIONS — Per release: “Protective Life Corporation is pleased to announce that Mary Pat Lawrence has joined the Company as Senior Vice President, Government Affairs, effective September 10. In this position, Lawrence will play an instrumental role in Protective’s state and federal legislative affairs, as well as regulatory matters.”

About The Author

Ben White is POLITICO Pro's chief economic correspondent and author of the “Morning Money” column covering the nexus of finance and public policy.

Prior to joining POLITICO in the fall of 2009, Mr. White served as a Wall Street reporter for the New York Times, where he shared a Society of Business Editors and Writers award for breaking news coverage of the financial crisis.

From 2005 to 2007, White was Wall Street correspondent and U.S. Banking Editor at the Financial Times.

White worked at the Washington Post for nine years before joining the FT. He served as national political researcher and research assistant to columnist David S. Broder and later as Wall Street correspondent.

White, a 1994 graduate of Kenyon College, has two sons and lives in New York City.

About The Author

Aubree Eliza Weaver is a deputy production director for POLITICO Pro, having previously served as a senior web producer. Aubree also co-authors Morning Money, POLITICO's daily morning newsletter on Washington and Wall Street.

She graduated from Le Moyne College in her hometown of Syracuse, N.Y., where she was the editor-in-chief of the school’s newspaper, The Dolphin. As a student, she interned with Time Warner Cable’s Syracuse affiliate, YNN, as a news broadcast intern. Aubree moved to D.C. upon graduating in 2013 to work as a summer program adviser for the Institute on Political Journalism. She was a student in the program in the summer of 2011, when she first fell in love with D.C.